Food security and global security - IEEE

José María SumpsiThe volatility of the agricultural markets and the world food crisisApart from a greater recurrence of natural disasters and adverse climateconditions, droughts, frosts, floods, hurricanes and other phenomena, whichmany experts link to climate change, certain modifications have been introducedin the agricultural policies of developed countries and some developingcountries after the Uruguay Round Agreement; this has led to a sharp reductionin the levels of stocks in the main exporting countries. The volume of cerealreserves maintained by public institutions has been drastically reduced as aconsequence of the elimination of intervention purchases by these sameinstitutions, the high cost of storing agricultural produce, the development ofother less costly risk management instruments than the policy of regulatorystock, the increase in the number of countries with an export capacity, andthe advances in information and transport technology. When there are severalpoor harvests in a row in the main exporting countries-as a consequence ofclimate phenomena, a reduction in the planting area for a particular crop, orother reasons- in a situation of low stock levels, the international markets holdback and become highly volatile so that any sudden shock in supply or demandis rapidly and strongly transferred to the prices of agricultural commodities.According to many experts this is one of the main causes for the soaringagricultural prices in 2007 and early 2008.148However, the major world economic recession of 2008 and 2009 and the dropin the income of poorer families has led to a decline in the demand for foodand a contraction of global trade which, together with the increase in worldagricultural production in 2008 (record harvests) and in 2009 (albeit to a lesserdegree), has meant lower agricultural prices globally and in developed nations.Thus, at the present time, high agricultural and food prices in many developingcountries coexist with low prices in developed countries, as in the case of thecountries of the European Union, where farmers are mobilising in order tomaintain farm subsidies.The last factor that explains the recent steep price rises in the period fromMarch to July 2008, when the international agricultural markets reachedrecord historical highs, involve the defensive public policies followedby some countries since early 2008 in order to defend their domesticconsumers. In fact, when the panic took hold of consumers (it is worthrecalling how American consumers stockpiled rice around this time,leading to several supermarket chains placing limits on the amount of ricea person could buy) or governments, who began to prohibit, limit or taxagricultural exports, prices shot up and went out of control. For example, inMarch 2008 and after the limitation on rice exports introduced by several ofthe main exporting countries, the global price for rice increased by 75% injust one week (FAO, 2008b). Nevertheless, these factors have a temporaryeffect and when the gravity of the situation subsides, these measures aregradually relaxed.